IPO Market Alive for Profitable Companies
The IPO market is alive and well--at least for profitable companies.
360Networks Inc. (TSIX), which is laying a vast fiber-optic network to serve Internet service providers and telecom firms, rose 36% in its first trading day Thursday as investors flocked to the issue because, unlike so many firms in the high-tech arena, it makes money.
The Vancouver, Canada-based company sold 46.3 million shares at $14 through an underwriting team led by Goldman Sachs Group Inc., and the stock rose as high as $20 before closing at $19 on Nasdaq.
360Networks is building a network that will connect cities throughout North and South America and Europe.
Ben Holmes, president of IpoPros.com, said investors are looking for sound fundamentals in the wake of the Nasdaq composite’s crash.
“The theme today was profitability,†he said, noting that 360Networks netted $23.6 million last year. “In spite of the fact the deal was reduced [in size], it looks like a gift from the underwriters to cut it and sweeten the deal for investors.â€
The shares were originally expected to fetch $16 to $18. Holmes called the success of the scaled-back deal a “promising†omen for the rattled IPO market.
360Networks also sold $787 million of junk bonds after cutting the size of that sale from $1 billion and offering juicy yields to entice buyers.
Buoyed by Nasdaq’s bounce this week, several other companies sold initial offerings late Wednesday after a weeklong drought, though they were forced to cut their sales by as much as 71% to lure investors.
PEC Solutions Inc. (PECS) of Fairfax, Va., slashed its sale to $28.5 million from the $98 million initially planned. Meriden, Conn.-based Packard BioScience Inc. (PBSC) sliced its IPO in half to $108 million.
San Francisco-based Embarcadero Technologies Inc. (EMBT) raised $42 million and Rockford Corp. (ROFO) of Tempe, Ariz., raised $32.5 million in new offerings that were scaled back less dramatically.
Embarcadero’s shares rose $6 to close at $16, but the other stocks got lukewarm or tepid welcomes: PEC slid 50 cents to $9, Packard rose 13 cents to $9.13, and Rockford was unchanged at $11.
Meanwhile, several other companies filed IPOs plans Thursday, including Hartford, Conn.-based Paradigm4 Inc., whose software links cell phone users with corporate databases. It hopes to raise as much as $125 million.
